Financial stability should not be monetary policy goal: Plosser

SAN DIEGO – The Federal Reserve should use monetary policy mainly to fight inflation, and "resist the temptation" to use it to achieve financial stability, a top Fed official said on Saturday.

"Financial stability should not be an explicit objective of monetary policy per se," Philadelphia Fed President Charles Plosser said at the American Economic Association's annual meeting.

"Price stability I believe should be the No. 1 priority of a central bank," he said, adding that the Fed's record over its first 100 years on price stability has been less than stellar. Prices have risen by a factor of 30 since the Fed's founding in 1913.

"I think we need to resist the temptation of adding the financial stability goal to the burdens of monetary policy," Plosser said.